Legislation Opens Up Domestic Chilean Solar Market

Rame Energy / Index: AIM / Epic: RAME / ISIN: JE00BBD8GG53 / Sector: Energy

2 October 2014

Rame Energy plc ("Rame" or the "Company")

"Residential Generation" Legislation Opens Up Domestic Chilean Solar Market

Rame Energy Plc, the international power generator and engineering company, is pleased to announce an update with regards to its solar activities in Chile, following the passing of legislation by the Chilean Government which will open up the country's domestic market for renewables and in particular, solar power. The legislation comes into effect this week. This update is in line with the Company's strategy to grow all three of its business divisions: On-Grid Power Generation, Off-Grid Power Generation and Engineering Services.

Highlights

· Rame is ideally positioned to capitalise on the emerging domestic solar market considering its in-country experience and following the recent acquisition of solar installation company Beco

· "Residential Generators" in Chile are now able to connect renewable energy systems, such as solar, to the distribution system and receive payments for the surplus electricity they generate

o House-owners are highly incentivised to install renewable power solutions, fuelling growth in the domestic market

· Rame has entered into an MOU with Santiago School 'Colegio Suizo de Santiago' ("CSS") to install their first 'residential' rooftop photo voltaic ("PV") system

· Rame will install, own and operate a 25kW solar power plant for CSS, scheduled for commissioning in early 2015, and scope exists to extend the solar plant to a capacity of 300kW

Lilian Nunez, CEO of Rame's South American Operations said "This legislation is the result of a participative process between various stakeholders, from government to distribution companies and independent power producers like Rame Energy. It provides a practical and workable framework that will ensure the domestic solar market will see huge growth. Through Beco Solar we have the immediate expertise and critical mass to allow us to be at the forefront of this new market and we are already designing our first rooftop systems that are covered by this new legislation."

Rame CEO Tim Adams said "We are delighted to be at the vanguard of residential generation in Chile. We recognise the increasing importance of solar power across all our markets and have the expertise to deliver scalable solar engineering and construction solutions. The MOU with CSS marks our entry to this new generation market almost simultaneously with the announcement of the enabling legislation, demonstrating the strong positioning of Rame to react quickly to new energy opportunities in the country. As an additional benefit, we will have effected the transfer of Beco Solar's installation capabilities into Chile with the prospect of a very substantial new installation business to target. Our dynamic response to new markets for both our engineering and generation activities continues to support our growth strategy as Rame remains focused on near term revenue and earnings."

Residential Generation Legislation

The Chilean government has sent another strong signal that it is committed to tackling its energy issues and sees renewable energy as a major contributor to its energy mix.

Renewables are already a major component in Chile's utility scale market and, last week, the market was further extended by the publication of new legislation regarding Residential Generators. The new net metering laws will open up the domestic market for renewable, and in particular, solar power.

Residential Generators will be now able to connect renewable energy systems, such as solar and wind as well as co-generation plants, to the distribution system. The legislation, which comes into effect this week, recognises the value of local power production and grants all small scale users (under 100kW) the right to grid connection. This provides a strong financial imperative; not only will house-owners benefit from the reduction in power drawn from the grid; they will also receive payment for the surplus electricity they generate. Owners will 'sell' surplus electricity back to the grid (at regulated tariffs) in return for a proportionate reduction in their electricity bills, or, if the surplus value exceeds the bill, a VAT free payment which, critically, can accrue over time.

This provides a big incentive for families and businesses to install PV systems and the Directors believe it will lead to an expansion in the country's rooftop solar market.

Additionally, under the new arrangements, smaller installations are not subject to the standard environmental protection procedures and the distribution companies will set the permitted installed capacity and be responsible for surplus injection readings. This makes the adoption of small scale PV systems relatively straightforward and therefore even more attractive to consumers.

MOU to provide power to Santiago School

The value of bolstering Rame's solar capabilities has been swiftly recognised as the Company has entered into a MOU with Santiago School 'Colegio Suizo de Santiago' ("CSS") to install their first 'residential' rooftop PV system.

Under the terms of the MOU, Rame will install, own and operate a 25kW solar power plant. The electricity produced will be sold to CSS under a 15 year power purchase agreement ("PPA") with any excess to be 'sold' back to the grid by the school. The plant is scheduled for commissioning in early 2015.

Not only will the project establish Rame's market presence and act as a demonstrator to the local community, there is scope to extend the solar plant to a capacity of 300kW. The ultimate ambition is to power CSS with 100% renewable energy and Rame will work in partnership with the school to provide a platform for teachers and students to engage in applied research and teaching processes.

**ENDS**

Enquiries

Notes

Rame is an established revenue generative global supplier of cost effective, technically optimised and reliable power generation solutions including wind, solar and diesel to blue chip clients such as Akzo Nobel, Anglo American, Barrick Gold and Codelco. Operating since 2002, the Company's Engineering Services Division applies its broad in-house expertise to produce technology optimised, cost effective energy solutions for private customers, in particular power intensive heavy industries such as mining, as well as providing general marine engineering services. This division's capabilities were recently bolstered through the acquisition of the UK's longest established solar businesses.

The Company joined AIM in Q2 2014 to give it access to the capital markets in order to accelerate its objective of becoming an Independent Power Producer ("IPP"). Rame is targeting an operational portfolio of 300MW in Latin America within three years. The Company plans to build on its proven track record of delivering power in South America where it has been involved in the development of approximately 23% of Chile's installed wind power capacity (as at 31 December 2013). Accordingly, Rame has executed its first joint venture agreement with Santander Investment Chile Limitada to co-finance its first two wind projects totalling 15 MW, in which Rame has a 20% equity participation. The debt package for the two projects is being provided by Chilean bank, Banco BICE.

The Company also has an Off-Grid Generation Divisionwhich builds sub-9MW wind/ solar/ diesel projects for private power sales.